Estate administration - Do you understand your role and responsibilities as an executor?

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Executor's roleIf you have been named as an executor of someone’s last will it is often unclear what must be done when that person has died, and what responsibilities are expected of you and any other executors.

The person making the will (previously called “the testator” and now known as “the will-maker”) is actually not required to tell you that you have been named an executor of the will. You can “renounce” the position of executor as being unwilling or unable to act in the role, but only if you have not already begun the process of administering the estate.

The primary obligation of the executor is to make sure that the will-maker’s wishes as expressed in the will are carried out. An executor has a number of legal responsibilities, including:

Funeral arrangements and dealing with the body

• It is the responsibility of the executor to deal with the body of the deceased person. The executor is responsible for the funeral account, but payment of the funeral account can be taken from the assets of the deceased person when they are brought in.

• If there are insufficient assets in the estate to cover the funeral account, it is possible to apply to the Work & Income New Zealand for a funeral grant of up to $1,959.42

• There is also a provision of the Burial and Cremation Act 1964 that requires a local authority that controls a cemetery or a crematorium to allow for the disposal of the remains of a destitute person (in certain circumstances) without charge.

• The funeral bill should always be the first account that is paid. If an executor has paid the funeral account from his or her own funds, then that executor has priority over all other claimants to be reimbursed for the account.

Control of assets

• The executor has the responsibility to bring in the assets of the estate, pay the debts and then distribute the estate in accordance with the will.

• In some cases the executor may be required to act as a trustee and hold money in trust for beneficiaries of an estate, for example, if there is a minor beneficiary.

• An executor will be in control of the deceased person’s assets, which includes taking control of the estate bank accounts, ensuring that the funds are kept on investment, paying the bills, making sure any estate owned properties are covered by insurance, finalising tax matters, and ultimately making payment of any specific bequests and distributing the balance of the estate to the beneficiaries named in the will.

• An executor will also be responsible for making decisions regarding the assets of the estate.

• The executor needs to keep an accurate inventory of the assets and debts of the estate.

Applying for Probate

• If there is any one asset held in the deceased person’s name that is worth $15,000 or more, for instance property, bank accounts, shares or life insurance, the executor or executors will need to file an application for Probate. Applying for Probate is the process of proving the will to the High Court and having the will formally accepted as the last will.

• The executor or executors should initiate an application for Probate within three months from the date of death. If they do not start the process of applying for Probate, then other parties can make an application. Likewise, if there are several executors named in the will and one of them will not agree to apply for a grant of Probate together with the others, then after three months from the date of death the other named executors can apply on their own.

Estate claims / challenges to the will

• There are three main types of claims that can be made on an estate: relationship property claims, family protection claims and testamentary promises claims; and executors should be mindful of the time limits that apply for bringing these claims.

• An executor can be held personally liable if they have distributed the estate and subsequently there is a successful claim against the estate that is brought within six months from the grant of Probate. Because of this, in most cases the executor(s) should not distribute the estate until six months has passed since the grant of Probate

• The executor will need to take a neutral stance in his or her capacity as executor in the event that a claim is made on the estate. If an executor is also a beneficiary of the estate, the executor will require independent legal advice in his or her capacity as a beneficiary of the estate in order to defend that claim

• An executor does not have an obligation to notify any potential claimants of the estate unless the potential claimant is not of full age or does not have full mental capacity, in which case the executor is obliged to do so

The responsibilities and liabilities of an executor are laid out in law. It is important that you understand the full impact of these when making any decisions in your role as an executor.

If you have been named as an executor of someone’s will, we can advise you on your responsibilities, and offer assistance with all aspects of fulfilling the role of executor.

If you require any advice on your obligations as executor or assistance with administering an estate,  please contact the Estates Administrator, 
Mimi Lewell by phone on 837 6831 or email mimi.lewell@smithpartners.co.nz 

You may also be interested in reading:

What happens at the first meeting with the estate's lawyers?Initial things to know when someone passes away?What happens during estate administration?What are the rights of a beneficiary of an Estate?Acting as An Executor Of A New Zealand Estate While Living Overseas

 

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